Former Coinbase manager Ishan Wahi, his brother Nikhil Wahi and a friend Sameer Ramini have been accused of manipulating customer information. Ishan Wahi was arrested by US authorities this Thursday.
The director of the SEC’s Division of Enforcement, Gubir S.Grewal, remarked in his letter:
“We are not concerned with labels, but rather the economic realities of an offering. In this case, those realities affirm that a number of the crypto assets at issue were securities, and, as alleged, the defendants engaged in typical insider trading ahead of their listing on Coinbase. Rest assured, we’ll continue to ensure a level playing field for investors, regardless of the label placed on the securities involved.”
According to the release, from at least June 2021 till April 2022, manager Ishan Wahi had advanced knowledge of at least 14 cryptocurrencies before they would get listed on Coinbase and other crypto assets. Furthermore, he also knew when Coinbase would publicly announce them.
To cover up the crime, Nikhil and Ramani opened accounts in other people’s names and moved funds through multiple anonymous Ethereum blockchain wallets.
The news of the arrest of its former manager ended up hurting the company’s reputation, even though its stock price rose 36% over the past five days. Coinbase’s stock price is currently 78% below its initial offering value.